- Critics argue Bitcoin mining‘s environmental impact outweighs its benefits.
- Data showed BTC mining is currently unsustainable.
- There are doubts about the accuracy of this data.
Bitcoin mining is an energy-intensive process in which specialized hardware competes to solve cryptographic puzzles. It requires trillions of guesses per second to match a target hash, and while this computation secures the network, it comes at a significant energy cost.
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Critics argue that Bitcoin mining is wasteful, with some even calling for a ban over environmental concerns . Recent data now claims it costs more to mine a single Bitcoin than its market price, casting doubt on mining’s long-term sustainability. However, questions linger over the accuracy of these figures.
Is Bitcoin Mining Unsustainable?
According to data from research platform MacroMicro, the average cost to mine one Bitcoin now exceeds its market value, suggesting that mining may be financially unsustainable under current conditions.
Average Bitcoin mining cost per MacroMicro
MacroMicro’s data indicates that it currently costs $80,670 to mine one Bitcoin, while the spot price is $68,700.
This disparity gives a 1.15 ratio of average mining costs to Bitcoin’s price, measured as a 30-day moving average. The ratio has climbed sharply since April, when it was at 0.65.
A ratio above one signals unprofitable mining conditions, which would push miners to exit the network. Conversely, a ratio below 1 creates incentives for more miners to join.
Electricity Costs Make All the Difference
With MacroMicro’s Average Mining Costs/Bitcoin Price Ratio above 1, inefficient miners would power down their rigs and exit the network. The network’s hash rate can offer insights although no direct data is available on the exact number of active miners.
Bitcoin’s hash rate hit a record high of 838 EH/s on October 21 and remains on an upward trend, according to CoinWarz. This sustained growth suggests that miners are not leaving the network, raising questions about the accuracy of MacroMicro’s data.
A potential issue with MacroMicro’s data is its assumed electricity cost, which may not reflect regional price variations. Research from Braiins showed that a small difference in electricity costs, $0.02 per kWh versus $0.03 per kWh, can mean the difference between a $22,480 profit and a $803 loss, highlighting how a small difference in electricity cost can impact mining profitability.
Bitcoin mining costs and impact on profitability, per Braiins
On the Flipside
- Miners often leverage unique advantages like stranded energy resources, energy arbitrage opportunities, or cooling solutions that can lower operational costs below “average” calculations.
- With block rewards halving every four years, more reliance will be placed on fees.
- Some miners maintain operations even during unprofitable periods because they believe in future price appreciation.
Why This Matters
While critics trumpet MacroMicro’s data as proof of Bitcoin’s mining crisis, the network’s soaring hash rate tells a different story.
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